The Ad Words Game

Several friends have been recently been releasing websites (as well as myself and my retail site http://www.network-accessories.com which has been open for business around 9 months now) and as the norm they have been trying out various strategies using basically Google ad words. Having not only played this game myself in the past but also discussing the various aspects of said game with several friends who have also done this sort of thing I have come up with some basic strategies for dealing with the problem.

First let me frame the problem properly assuming you are trying to sell a product or service on-line; it is not how many folks visit your site, it's how many actually bought. So, for example, if I pay $100 a day in ad words fees and I get 1,000 visitors a day but nobody purchases anything then I have basically thrown away $100 a day. If, however, I pay $50 a day in ad words fees and I get 1 purchase for $100 then I have successfully spent my money. This concept known as conversion rate is well known to most. What I will briefly explain is just what a good conversion rate is considered.

Conversion rate is based on anticipated sale and that anticipated sale may be over the lifetime of the site, so for example, if it costs me $100 to convert a customer who only purchases $25 worth of product from my site on first visit that is OK since that customer has the potential to buy again and again from my site, so even though the initial conversion rate is negative we can amoritze that customer across the life of the site so if I feel the average customer will purchase $500 a year of products from my site then this is a good conversion.

Obviously the game is won and lost in this example on proper calculation of the various metrics which go into site revenue generation. Now the picture gets a little more cloudy if you are a virtual site who makes money by redirecting traffic. Since I do not deal with these types of sites (all my sites provide a real product or real service) I can't really comment on how to best spend your ad words budget, besides from my perspective, once I get you to my site the last thing I want to do is send you away from it.

I do know that I can offer the following advice ...

1. Use yahoo or ask.com ad words first to test the waters as they tend to be cheaper.
2. Once you have a campaign or two you are comfortable with then switch to Google.
3. A good conversion rate is somewhere between $25-$50 per conversion where conversion means a customer purchase (of course if the average purchase is over $1,000 then a higher conversion rate is acceptable).
4. There are a bunch of alternatives to Google, many which even allow you to choose the sites your ads will appear on.
5. The obvious natural search trick is to get listed on as many high quality sites as possible (IBM, Microsoft being two examples of high quality sites)
6. Link exchanges tend to hurt natural search from Google.
7. Blogs and posts help a bit but not as much as is believed.
8. Trade Journals and association based websites are excellent back links (a link from a local government site as an approved vendor is a valuable back link)

Obviously there are many more tricks and tips but that is all I have time for today as the wife requires me to take her shopping. Take a look at my friends at http://www.zipytax.com to see a web site which provides a service but offers no loud marketing or fancy graphics. Maybe this will become the wave of the future. Also don't forget if your looking for things to do http://www.ontheroadevents.com (alternatively http://www.mister-ticket.com) is an excellent place to find meetups and events in your area.